SAL Automotive Ltd Management Discussions

COMPANY PROFILE

SAL Automotive Limited (SAL) is a renowned manufacturer of automotive components and agricultural implements. We take pride in being the preferred supplier to leading manufacturers of passenger vehicles, commercial vehicles, and tractors. Our diverse product line encompasses a range of high-quality offerings, including seats, seat mechanisms, and seat frames.

In addition to our automotive component production, we also specialize in manufacturing top-notch agricultural implements. Our portfolio includes products such as Rotavators, planters, Rotary Tillers, Box Scrapper, etc. which are designed to meet the unique needs of the agricultural sector.

At SAL, we are committed to delivering excellence in both the automotive and agricultural industries, ensuring our customers receive top-tier products and solutions.

FINANCIALS OVERVIEW

While details of financial position and performance for the Financial Year ended 31 st March, 2025 the Financial Year are available in the Balance Sheet, Statement of Profit & Loss, along with related notes, key aspects are highlighted in the following paragraphs:

(Rs. in Crores)

Particulars	2024-25	2023-24
Automotive Components: -	147.86	146.65
- Seats for T ractor & Commercial Vehicle	90.89	80.78
- Seat Mechanisms	16.30	22.68
- Seat Frames	40.67	40.11
- Others	3.85	3.08
Agriculture implements	222.47	161.02
- Rotavators	219.28	161.02
- Veg Planter & Others	6.77	-
Net Revenue from Operations	377.76	307.52
Other Income	1.73	0.96
Total Revenue	379.49	308.48

- Equity & Reserves

The Companys net worth as on 31 st March 2025 stood at Rs. 43.03 crores (previous year Rs. 38.83 crores) comprising of an Equity component of Rs. 2.40 crores (previous year Rs 2.40 crores) and Reserves & Surplus of Rs. 36.43 crores (previous year Rs 40.63 crores).

Book value per share having facing value of Rs 10 each is Rs 179 per share (previous year Rs. 162 per share).

- Trade Receivables

Trade receivables as at 31st March, 2025 stood at Rs. 44.22 crores (previous year Rs. 36.76 crores) having debtors turnover ratio of 9.33 times (previous year 8.34 times).

- Trade Payables

Trade payables as at 31st March, 2025 stood at Rs. 49.85 crores (previous year Rs. 40.57 crores).

- Cost of Material Consumed

During the financial year 2024-25, the global economy experienced a post-pandemic scenario characterized by a surge in global demand.

Despite the impact on raw material and other costs, SALs management diligently worked to mitigate the effects and keep the expenses under control. Through their efforts, the company was able to improve raw material cost as a percentage of net revenue from operations. This figure stood at 79.7%, compared to the previous years level of 78.1%. The growth in sales volume of products with higher material costs played a vital role in achieving this result.

SAL remains committed to adapting to market fluctuations while ensuring the production of high-quality automotive components and agricultural implements. Our focus on efficient cost management and development of new products as per requirements will deliver value to our customers in the upcoming financial year.

- Other Overheads

Consisting of personnel cost, manufacturing expenses, administrative expenses and sales & distribution expenses during the year were Rs. 63.80 crores (previous year Rs. 54.49 crores).

- Depreciation & Amortization

Depreciation for the year stood at Rs. 4.28 crores against previous year figure of Rs. 4.11 crore which increased primarily due to additional Capex made during the year under review.

- Results

Reflecting the above and after considering finance cost, Profit/(Loss) before Tax was Rs. 7.87 crore (previous year (Rs. 6.78 crore)). Total Comprehensive Income for the current year was Rs. 5.27 crore (previous year Rs. 4.84 crore)

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies Act-2013 as per Section 133 read with rule 3 of Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.

The accounting policies have been consistently applied.

INTERNAL FINANCIAL CONTROL SYSTEMS & THEIR ADEQUACY

In the financial year 2024-25, SAL has implemented robust procedures to ensure effective internal control. These policies and procedures have been put in place to provide reasonable assurance that the companys assets are protected from the risks of unauthorized use or disposition. Additionally, they aim to ensure that all transactions are accurately and promptly recorded and reported.

To uphold the integrity of these controls, regular reviews are conducted during both internal and statutory audits. These evaluations assess the effectiveness of the established procedures and identify areas for improvement. Importantly, no material weaknesses were observed in the operating effectiveness of the internal financial controls tested during the year.

The Finance and Accounts function of SAL is well-equipped with a competent team of experienced and qualified personnel. This ensures the smooth functioning of financial operations and enhances the companys ability to meet its obligations effectively.

The Board of Directors and the Audit Committee play an active role in monitoring and evaluating the operational and financial performance of the company. Through regular intervals, these governing bodies conduct comprehensive reviews to assess the companys progress and address any potential areas of concern.

SAL remains dedicated to maintaining strong internal control measures, supported by qualified professionals and a diligent monitoring process. By adhering to these practices, we strive to safeguard our assets, ensure accurate financial reporting, and drive overall organizational excellence.

HUMAN RESOURCES

In the financial year 2024-25, SAL continues to thrive with a highly committed, loyal and dedicated team. Our company fosters an environment that promotes learning and encourages informal communication within the organization, enabling employees to grow both personally and professionally.

To objectively measure individual and organizational performance, SAL has implemented a robust Performance Management System (PMS). This system not only evaluates individual contributions but also aligns with the overall remuneration structure. By linking performance with rewards, we motivate our employees to strive for excellence.

Recognizing the importance of continuous learning and development, SAL has established a comprehensive training need identification system. This system identifies areas where employees can enhance their skills and knowledge, ensuring that they remain competent and up to date in their roles. This commitment to learning has made a significant contribution to the success of our company.

Throughout the year under review, employee relations remained affable, fostering a harmonious work environment. SAL has already signed a long-term settlement with the workers union, ensuring stability and positive collaboration.

In addition, we diligently adhered to all required safety norms across our entire company.

At SAL, we remain committed to nurturing our talented workforce, promoting a culture of continuous learning, and prioritizing the health and safety of our employees. These efforts contribute to our overall business success and reinforce our position as a responsible and caring organization.

Regular employee strength as on 31 st March 2025 stood at 306 (as on 31st March, 2024 - 310)

INDUSTRY STRUCTURE AND DEVELOPMENTS

In the financial year 2024-25, SAL continues to excel in the manufacturing and supply of seats, seat mechanisms, and agricultural implements to various manufacturers in the tractor, LCV, car, and agricultural product sectors. The performance of our company is closely tied to the performance of the automotive and agriculture industries.

In the financial year 2024-25, the Indian auto industry witnessed a growth in production. A total of 3.10 crore vehicles, including passenger, commercial, three-wheelers, and two-wheelers, were produced during this period, compared to 2.84 crore vehicles in the previous financial year (2023-24), representing a growth of 9.1%. A segment-wise analysis reveals a growth in production across all segments during FY-24-25 except de-growth of 3.3% in commercial vehicle (Source: SIAM website).

Coming to T ractor Industry where growth of 6.4% in production has been witnessed in the financial year 202425. A total of 10.08 Lakh tractors were produced against 9.47 Lakhs in the previous financial year (2023-24).

SAL remains committed to delivering high-quality products and solutions to our customers. We closely monitor industry trends and adapt our strategies accordingly to navigate through market fluctuations. Our experienced team and dedication to excellence position us to overcome these obstacles and emerge stronger in the coming years.

OUTLOOK/OPPORTUNITIES

Both Automotive and Agri-Implement Industry looking forward for growths in upcoming years. Your company being supplier to OEMs also expected to grow in upcoming years. Government policies and other economic factors also providing good purchasing power to rural and semi-urban areas of the country which may lead to positive results for your company as well in upcoming years. The Automotive Industry and Government of India, aims to set a new trajectory for the evolution of the automotive industry ecosystem, considering its size, global footprint, technological maturity, competitiveness and capabilities.

Furthermore, several other factors are poised to act as catalysts for industry growth. These include the governments continuous focus on strengthening the rural sector, infrastructure development, initiatives like Make in India and Skill India, the launch of new vehicle models by manufacturers, changing buying patterns and replacement demand.

At SAL, we are closely monitoring these market dynamics and are prepared to adapt and capitalize on the opportunities that arise. By aligning our strategies with industry trends and leveraging our capabilities, we aim to navigate through these challenging times and contribute to the growth and success of the industry.

NEW DEVELOPMENTS

In the financial year 2024-25, SAL continued to contribute to the manufacturing industry in India, driven by the "Make in India" initiative of the Indian government. India is rapidly emerging as a manufacturing hub, and the automobile sector plays a prominent role in this transformation. Many international automobile giants have already established their manufacturing facilities in India, while others are in the process of doing so. The western and southern regions of India have become key hubs for the automobile sector, attracting both manufacturers and suppliers. SAL is actively exploring opportunities to set up new facilities near these manufacturing hubs, strengthening its focus on the auto ancillary business.

Recognizing the immense growth potential, SAL has further enhanced capacity for manufacturing "Agriculture implements." This segment, primarily involving contract manufacturing of Rotavators, has contributed 60% to the companys revenue.

Furthermore, SAL is striving to expand its presence to include Indian Railways coach components, such as seats and berths. The company has executed development orders for Railways in the recent past and actively pursuing opportunities to supply different types of berths to all coach factories of Indian Railways.

SAL has also developed and supplies seats for EV Commercial Vehicle, and this is expected to help in growth of revenue in the coming years.

By expanding into these strategic business segments and exploring new avenues for growth, SAL aims to leverage Indias manufacturing potential and diversify its product offerings. These initiatives align with the companys vision of expanding its presence and contributing to the overall development of the automotive and manufacturing industries in India.

THREATS, RISKS & CONCERNS

In the financial year 2024-25, SAL, as a supplier of components to tractor and automobile original equipment (OE) manufacturers, is directly influenced by the factors affecting these industries. Several factors can impact both the tractor and automobile sectors, including the quantum and distribution of rainfall, government policies on procurement, enforcement of safety and emission regulations, availability of credit, changes in interest rates, trends in commodity prices and increasing competition.

In the short-term, the tractor industry is experiencing a downturn due to various factors affecting demand from rural areas of India. While these factors may present challenges, SAL remains vigilant and adaptable to market dynamics. We closely monitor industry trends and customer requirements, enabling us to respond swiftly and effectively to changing demands.

As an organization, SAL is committed to maintaining strong relationships with our customers and adapting our strategies to meet their evolving needs. By staying attuned to the industry landscape and customer preferences, we position ourselves to navigate through short-term fluctuations and remain resilient in the face of challenges.

The details of changes in the key financial ratios as compared to previous year are stated below:

Sr. No. Particulars	2024-25	2023-24	Change (%)	Reason
1 Debtor Turnover Ratio	9.33	8.34	+12%	With better collections and improvement in credit management in line with increase in revenue.
2 Inventory Turnover Ratio	13.46	10.45	+29%	Improved primarily due to better control in inventory during the year.
3 Debt Service Coverage Ratio	1.89	0.82	+130%	Improved due to significant repayment of debts and increase in earnings during the year.
4 Current Ratio	1.19	1.10	+8%	Improved with better management of Key Aspects.
5 Debt Equity Ratio	0.51	0.63	-19%	Primarily due to repayments of borrowings and increase in earnings.
6 Operating Profit Margin (percentage)	3.8	4.4	-18%	Revenue growth in segment biz where contribution margin is lower and increase in other overheads has impacted the overall margins.
7. Net Profit / (loss) (percentage)	1.4	1.6	-18%
8 Return on Net Worth (percentage)	20.7	16.6	-5%	Primarily due to increase in profits.

ACCOUNTING TREATMENT

The financial statements of the Company are prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the Act) and comply with the applicable Indian Accounting Standards.

CAUTIONARY STATEMENT

Statement in the Management Discussion and Analysis Report describing companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

Place: Ghaziabad	For and on behalf of the Board
Date: 12th August, 2025	Rajiv Sharma
	Chairman
	DIN :07418337